Smith v. Smith

• Decision Date: 10 June 1912
• Citation: 125 P. 987,45 Mont. 535
• Parties: SMITH v. SMITH et al.
• Court: Montana Supreme Court

125 P. 987

45 Mont. 535

SMITH v. SMITH et al.

Supreme Court of Montana

June 10, 1912

Appeal from District Court, Meagher County; W. R. C. Stewart, Judge.

Action by William J. Smith against Mary M. Smith, as executrix, and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Wm Scallon, of New York City, and T. J. Hoolan and Walsh & Nolan, all of Helena, and T. F. Nolan, of Butte, for appellant.

L. O Evans, of Butte, McIntire & McIntire and R. Lee Word, all of Helena, for respondents.

SMITH J.

This is a suit in equity, the purpose of which is, in effect, to set aside a sale of 40,983 1/3 shares of the capital stock of the Smith Bros. Sheep Company, made by Napoleon B. Smith, as executor of the last will and testament of William A. Smith deceased, to John M. Smith in his lifetime, and to obtain an accounting. The plaintiff is a son and one of three heirs at law of William A. Smith, deceased. His two sisters, Annie Maud Kahle, residing in the state of Ohio, and Nellie Mae Moore, a resident of the state of Missouri, are the other heirs at law of their father. A suit, similar to the instant one, was begun in the Circuit Court of the United States for the District of Montana by Nellie Mae Moore; that court entered a decree in favor of the defendants, which was reversed on appeal by the Circuit Court of Appeals for the Ninth Circuit; the latter court ordering a decree in favor of the complainant substantially as prayed for. This cause was tried to the district court of Meagher county, sitting without the aid of a jury. The result was a decree or judgment in favor of the defendants, from which, and an order denying a new trial, the plaintiff has appealed. The action was, by stipulation, submitted to the district court on a printed transcript of the evidence taken in the case of Nellie Mae Moore against the defendants, theretofore heard in the federal court, supplemented by a brief examination of the plaintiff touching the circumstances under which he made settlement with his guardian, John M. Smith, on arriving at his majority. As stated in the brief of counsel for the appellant, "the cause is before this court for determination on identically the same evidence on which it was heard in the Circuit Court of Appeals." We therefore take the following statement of facts from the opinion in that case (see Moore v. Smith, 182 F. 540, 105 C. C. A. 78):

"The record shows that for many years John M. Smith and William A. Smith, who were brothers, were the owners of a large amount of land in the state of Montana, upon which they carried on the sheep, cattle, and horse business. At first they managed the business themselves; but in 1890 they organized a corporation under the laws of Montana, under the name of Smith Bros. Sheep Company, to which corporation they conveyed all of their property. Each of them was married, and to the wife of each was given 5,000 shares of the capital stock of the company, which amounted to 250,000 shares. The remainder of the stock was divided equally between the brothers. The wife of William A. Smith deserted him in 1891, leaving three small children, the oldest a boy, then seven years old, and two younger girls, the older of whom was the complainant in this case, and is the appellant here. These children William A. Smith subsequently sent to live with their aunt, a Mrs. Reynolds, in Ohio, who was a sister of the two brothers. Napoleon B. Smith, who was their nephew, was an attorney at law residing at White Sulphur Springs, Meagher county, Mont., in which county most of the property of the brothers was situated, and in which they both resided. William A. Smith died there on February 13, 1897, and on his deathbed made his will, which was drawn by Napoleon B. Smith, by which will he left all of his estate to his three children and appointed his said nephew executor thereof.

"During the course of his examination as a witness, John M. Smith was asked what, if any, request his brother William made of him in his last illness regarding his children, and answered: 'A. The last words that he said to me was: "N. B. Smith is my administrator, and he will attend to the affairs in that way; and I want you to look after the interests of my children." Those were the dying words that he said. Q. And did you say you would? A. I said I would, and I have, faithfully.' At the time of his death, William A. Smith was the owner of 122,950 shares of the stock of the Smith Bros. Sheep Company; John M. Smith then owning a majority of the stock.

"The case shows that John M. Smith was himself then in poor health, as was his wife, and that in consequence he spent much of his time at Pasadena, Cal., where he was at the time of much of the correspondence hereinafter referred to. Some time after the business was incorporated, one McNaught, who was a brother-in-law of John M. Smith, became manager of the property under the supervision and direction of the latter. The will of William A. Smith was admitted to probate, and Napoleon B. Smith became executor of his estate. After the death of William A. Smith, and because of the age and poor health of John M. Smith, and, perhaps, from other reasons, both John M. Smith and the executor became desirous of selling the whole property. A sale by John M. Smith of his majority of the stock to a stranger might have worked to the injury of the minority interest of the children of the deceased William A. Smith, so that both John M. Smith and the executor of the estate of William A. Smith became desirous that both interests be sold together. Repeated efforts in that behalf failed of accomplishment.

"On the 23d of November, 1897, McNaught asked for an option of purchase, to run until the end of the year, on all of the property, free of debts, except future payments on certain railroad land contracts, on which application J. M. Smith indorsed this: 'My figuers is two hundred and twenty thousend 220,000 subject to the approvel of Mary Smith (wife of John M. Smith) & N. B. Smith to date from Jan. 1, 1892, time to complete sale about to the 10 of Jan., 1898. J. M. Smith.' The executor of the estate of William A. Smith indorsed thereon the following: 'In case a buyer can be found for the property at the amount above stated I will immediately make application to the district court of Meagher county, Montana, to sell the interest of the estate of W. A. Smith, deceased, in said property at the rate above stated. [Signed] N. B. Smith.'

"The evidence shows that the executor regarded the estimate of John M. Smith as to the value of the property at the time too high, as did others.

"On the 14th of December, 1897, John M. Smith wrote a letter from Martinsdale, Mont., to the executor, which reads in part as follows: 'N. B. Smith--Der Sir & Nefue: *** Mr. McNaught is back from Helena he could not get a party to take hold of the property, but I think the chance will be better next summer I want to sell out so as to go some plase that I can be with my famley & can send Stanley [his son] to school as long as I hold it I can't be sadesfied away from it & I dont want to sell out & leave the childrens interest in it I think the coming year will be the time to let gow of the intire plant you can at the next turm get a permit to sell wills intrest at anney time that we can get fair value for it then we can go ahead with it when the opertunity Shows up I think it will be well to arange that the text turm of Court. I dont think that we will sell much befoar next July or Auges but I dew want to sell as soon as we can to advantage if I was yong I would not cair to sell for it is a good property well managed at what I ask for it.'

"The record shows that on the 24th day of January, 1898, the judge of the probate court made an order, based upon the application of the executor, authorizing him to sell all of the 122,950 shares of the stock of the company belonging to the estate of William A. Smith, deceased, 'at private sale and without previous notice, provided that said personal property be sold at a sum not less than seventy-five thousand dollars, and may indorse said stock for the purpose of said sale, and may do all other acts requisite for the purpose of said sale, and may do all other acts and things requisite and necessary to transfer all of the interest of said estate in and to said stock and the property represented by said stock. That said stock be present at the time of said sale, and that said executor present to this court, at the next term thereof after such sale, an account of sale, verified by his affidavit.'

"On the 19th of the following March, John M. Smith wrote a letter from Helena, Mont., to the executor, which is in part as follows: 'Mr. N. B. Smith--Dear Nefue: I wish to get the least price that you can excep for the children stalk [stock] I may have to dew some figuering to sell the Plant & in case I knawed fest how much I could drop and pay all debts it would give me a chance to handel my self what would you give me a opten on the Stock after the debts is payed I think you said the order was for you to sell for $75,000 but we think we can dew better then that I think I can get them 80 or 85,000 out it clear for them now can you name enney price that would soat you to give a opchen on so I might have a maregen to mark [work] on think the matter over & let me know. [Signed] J. M. Smith.'

"On March 25, 1898, the executor replied, as follows: 'Office of N. B. Smith, County Attorney, Meagher County. White Sulphur Springs, Mont. March 25, 1898. Dear Uncle: Your letter in regard to the stock of the estate came to hand. I have been thinking over the matter. I think rather than see a sale go by I would be willing to take $85,000 for the stock. I want to do what is fair by the

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